Five questions answered on the wholesale gas price fixing allegations

Regulators are investigating claims wholesale gas prices have been manipulated by major gas companies. We answer five questions on the gas pricing fiasco.

What exactly are the allegations being made? 

Major energy companies are being accused of manipulating the wholesale price of gas in the same way banks have manipulated libor. 

Energy companies buy gas at wholesale price then sell it onto to homes and businesses. On the 26 September gas companies are alleged to have made unrealistic bids at a time when data was being collected to set the wholesale price, they area alleged to have done this in order to suit their own situation rather than making a realistic bid.

Who discovered this alleged price-fixing? 

The whistle was blown by Seth Freedman, who worked at ICIS Heren, a financial information company that publishes energy price reports.

The Guardian report that Freeman flagged up a set of suspiciously low trades he believed were designed to depress ICIS Heron’s ‘day ahead’ price on the 28th September. One trader told Freeman in regards to the range of prices quoted on the 28th September:

There's a feeling among some people that somebody's taking the piss a bit on the day-ahead index.

ICIS Heren also told the BBC it had:

Detected some unusual trading activity on the British wholesale gas market on 28 September 2012, which it reported to energy regulator Ofgem in October.

Does wholesale price manipulation affect consumer prices?

Not directly as the price is being manipulated to be lowered. Wholesale gas price makes up an average of 45 per cent of consumers bills so lowering it shouldn’t affect bills. However, it is still a damaging discovery as Freeman has explained: 

There's certainly a link. They [the power companies] are telling you: Look, in order to make our profits and cover our costs and so on, we have to give a price to retail customers which reflects the cost to us.

But if you can't trust the market at a wholesale level, it becomes a crisis of confidence. People at retail level are just thinking, "I don't trust these companies" - and it needs to be scrutinised.

What has been the response of energy providers?

The big six energy providers have all released statements denying the claims. However, some of these ‘big six’ are currently being investigated by the Financial Services Authority and Ofgem. 

What has government said?

Energy Secretary Ed Davey will make a statement in the House of Commons today, but he has already said he is extremely concerned about the allegations. 

The Treasury Secretary, Greg Clark, spoke of the seriousness of the allegations to the BBC, saying:

Any scintilla of doubt that the participants cannot be trusted has a tremendously important effect.

I think it's very straightforward. When someone breaks the law, they should be punished, and when it's as serious as this, they should be punished very severely. And it's as true for stealing through financial manipulation as it is, frankly, for breaking and entering.

Photograph: Getty Images

Heidi Vella is a features writer for Nridigital.com

Getty
Show Hide image

Theresa May's offer to EU citizens leaves the 3 million with unanswered questions

So many EU citizens, so little time.

Ahead of the Brexit negotiations with the 27 remaining EU countries, the UK government has just published its pledges to EU citizens living in the UK, listing the rights it will guarantee them after Brexit and how it will guarantee them. The headline: all 3 million of the country’s EU citizens will have to apply to a special “settled status” ID card to remain in the UK after it exist the European Union.

After having spent a year in limbo, and in various occasions having been treated by the same UK government as bargaining chips, this offer will leave many EU citizens living in the UK (this journalist included) with more questions than answers.

Indisputably, this is a step forward. But in June 2017 – more than a year since the EU referendum – it is all too little, too late. 

“EU citizens are valued members of their communities here, and we know that UK nationals abroad are viewed in the same way by their host countries.”

These are words the UK’s EU citizens needed to hear a year ago, when they woke up in a country that had just voted Leave, after a referendum campaign that every week felt more focused on immigration.

“EU citizens who came to the UK before the EU Referendum, and before the formal Article 50 process for exiting the EU was triggered, came on the basis that they would be able to settle permanently, if they were able to build a life here. We recognise the need to honour that expectation.”

A year later, after the UK’s Europeans have experienced rising abuse and hate crime, many have left as a result and the ones who chose to stay and apply for permanent residency have seen their applications returned with a letter asking them to “prepare to leave the country”, these words seem dubious at best.

To any EU citizen whose life has been suspended for the past year, this is the very least the British government could offer. It would have sounded a much more sincere offer a year ago.

And it almost happened then: an editorial in the Evening Standard reported last week that Theresa May, then David Cameron’s home secretary, was the reason it didn’t. “Last June, in the days immediately after the referendum, David Cameron wanted to reassure EU citizens they would be allowed to stay,” the editorial reads. “All his Cabinet agreed with that unilateral offer, except his Home Secretary, Mrs May, who insisted on blocking it.” 

"They will need to apply to the Home Office for permission to stay, which will be evidenced through a residence document. This will be a legal requirement but there is also an important practical reason for this. The residence document will enable EU citizens (and their families) living in the UK to demonstrate to third parties (such as employers or providers of public services) that they have permission to continue to live and work legally in the UK."

The government’s offer lacks details in the measures it introduces – namely, how it will implement the registration and allocation of a special ID card for 3 million individuals. This “residence document” will be “a legal requirement” and will “demonstrate to third parties” that EU citizens have “permission to continue to live and work legally in the UK.” It will grant individuals ““settled status” in UK law (indefinite leave to remain pursuant to the Immigration Act 1971)”.

The government has no reliable figure for the EU citizens living in the UK (3 million is an estimation). Even “modernised and kept as smooth as possible”, the administrative procedure may take a while. The Migration Observatory puts the figure at 140 years assuming current procedures are followed; let’s be optimistic and divide by 10, thanks to modernisation. That’s still 14 years, which is an awful lot.

To qualify to receive the settled status, an individual must have been resident in the UK for five years before a specified (although unspecified by the government at this time) date. Those who have not been a continuous UK resident for that long will have to apply for temporary status until they have reached the five years figure, to become eligible to apply for settled status.

That’s an application to be temporarily eligible to apply to be allowed to stay in the UK. Both applications for which the lengths of procedure remain unknown.

Will EU citizens awaiting for their temporary status be able to leave the country before they are registered? Before they have been here five years? How individuals will prove their continuous employment or housing is undisclosed – what about people working freelance? Lodgers? Will proof of housing or employment be enough, or will both be needed?

Among the many other practicalities the government’s offer does not detail is the cost of such a scheme, although it promises to “set fees at a reasonable level” – which means it will definitely not be free to be an EU citizen in the UK (before Brexit, it definitely was.)

And the new ID will replace any previous status held by EU citizens, which means even holders of permanent citizenship will have to reapply.

Remember that 140 years figure? Doesn’t sound so crazy now, does it?

0800 7318496